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VOL. 130 | NO. 32 | Tuesday, February 17, 2015

Debt, Pension Overhang Top City Council Priorities

By Bill Dries

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UPDATE: Council committee sessions are beginning late Tuesday – at 10:30 a.m. – because of weather-related road conditions, and committees will have a condensed schedule, according to council staff.

After a long summer of difficult decisions on pensions and health insurance, Memphis City Council members have a full day of briefings Tuesday, Feb. 17, that are a preview to the budget season to come in the spring.

(Daily News File/Andrew J. Breig)

Beginning Tuesday, Feb. 17, in committee sessions of the Memphis City Council, the Wharton administration will begin rolling out key elements of its annual budget that begins July 1 as well as other financial moves underpinning the city’s ability to carry out its objectives.

No votes on any of the measures are scheduled for the council’s Tuesday voting meeting. The council meets at 3:30 p.m. at City Hall, 125 N. Main St. Follow the meeting and get updates on committee sessions earlier in the day @tdnpols, www.twitter.com/tdnpols.

At a 1 p.m. executive session, the administration outlines in detail its plan for restructuring the city’s debt payments after getting the green light for the proposal last week from state officials in Nashville.

City finance director Brian Collins and chief administrative officer George Little reviewed the restructuring with several council members at a half-day council “working session” earlier this month.

A climb of a $3 million a year increase in the city’s debt payments through fiscal year 2019 to $15 million would double to $30 million in fiscal year 2020 through fiscal year 2022 without a restructuring.

The 2020 ballooning would have come earlier without the 2010 restructuring that Memphis Mayor A C Wharton Jr. proposed and the council approved. If the proposed restructuring is approved, the city’s debt payments would instead balloon in fiscal year 2023 and the increased payments would continue through fiscal year 2026.

The administration’s argument to the council for the restructuring will likely be that if the balloon payments start in 2020, it affects the city’s ability to meet the state law requiring it to fully fund its pension program by fiscal year 2020.

Council members will review pension funding issues in a 9:40 a.m. committee session. Changes to city pension benefits approved last year along with changes to city health insurance coverage have produced an estimated $12 million “overhang” or possible extra expense for the city, Collins said.

With city revenue collections doing better than expected half way through this fiscal year, Collins said the city should be able to handle the overhang with $12 million from the city’s reserve fund if need be.

The overhang was created by amendments made to both plans by the council as well as the administration after the broader set of changes were approved. The amendments kept pre-65 retirees on the city’s health insurance as well as kept spouses from being dropped from both plans.

The number of pre-65 retirees who have signed up to stay on the city’s health insurance ended up being “closer to 1,000” than the 500 the administration estimated, Collins said.

The administration is auditing the applications, a process that is expected to take several months to determine if the initial number is accurate.

Meanwhile the administration will outline its proposal for advancing with a conversion of the Raleigh Springs Mall to a “town center” with city facilities, including a police precinct to the mall property at Austin Peay Highway and Yale Road.

Council members get their first look at the financing, totaling $31.2 million at a 10:30 a.m. committee session. It calls on the council to approve allocating $23.7 million in capital funding in addition to the $7.5 million the council moved to the project in November 2013. The 2013 amount was the capital funding for a new police traffic precinct at another location.

Wharton said last week that the city had started eminent domain proceedings on the mall itself to demolish parts of it. The city has reached an agreement with the owners of outparcels on the mall property short of eminent domain.

The city hopes to get $6.2 million from selling the property where the Old Allen police station and the traffic precinct are currently as well as for city owned property at the Austin Peay-Yale Road intersection the city had originally planned to use for various city facilities over two mayoral administrations.

Also in Tuesday committee sessions, council members take up a resolution that would allow a spring turkey hunt on Presidents Island using shotguns as well as bows and arrows.

Under an existing 2001 agreement by the Memphis-Shelby County Port Commission with the Tennessee Wildlife Resources Agency, there is some limited hunting in the industrial area.

It is limited despite the abundance of wildlife that endures on the peninsula because of long-standing concerns from the industries on Presidents Island about shotgun-hunting in particular close to their facilities.

In zoning and development matters, the council votes Tuesday on a used car lot by Lee Nguyen as K’s Auto Inc. at 1780 Getwell Road near Mallory Avenue. The 2.2 acre site was once part of a larger tract of land owned by Bluff City Buick and has been used for car sales since 1989. South Park Elementary School is north of the proposed car lot.

The council also votes Tuesday on the second of three readings of an ordinance that would create a Beale Street Tourism Development Authority. The administration’s first version was a resolution. But the council changed it to an ordinance and added more council oversight to the proposal.

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